BRADENTON, Fla. — Tampa Bay Water, a regional supplier on Florida's mid-west coast, will pay $20.6 million plus interest and attorneys' fees to the engineering firm it sued over alleged design flaws in a reservoir.
The 11th Circuit Court of Appeals struck down TBW's appeal of a lower court ruling, which became final on Wednesday.
The appellate court found that the district tribunal did not err in determining that HDR Engineering was not culpable for cracks that developed after the reservoir opened in 2005.
The board overseeing TBW decided Oct. 21 to end nearly five years of litigation against HDR over claims that the engineering firm was responsible for the design that led to cracks in the 15-billion gallon C.W. Bill Young Regional Reservoir, the state's largest potable water storage basin.
"While the outcome has fallen well short of our expectations and was not favorable for the agency, we firmly believe that trying to recoup the public's investment through legal action was the right decision," said Pinellas County Commissioner and board chairwoman Susan Latvala in a statement. "We fought hard for what is right, and now we have to do what is in the best interest of the agency and the community to bring this chapter to a close."
Tampa Bay Water initially demanded $200 million during settlement talks before filing suit against HDR. More than $100 million in damages was sought at trial.
Though it lost its suit against HDR, the agency negotiated a $6 million settlement with the reservoir's construction management firm, Construction Dynamics Group, and $750,000 was received from the general contractor, Barnard Construction Co.
The $6.76 million in settlements was placed in escrow along with other rate stabilization funds to pay the judgment awarded to HDR.
TBW hired Kiewit Infrastructure South Inc. to design and repair the reservoir for $129.4 million. The work is underway, and expected to be complete in December 2014.
The reservoir cost about $146 million to build, and was largely financed with bonds.
Another $75.3 million of utility revenue bonds were sold in January to provide partial funding for the renovation work. The rest of the funding will come from prior bond proceeds and other sources.
The bonds were rated AA-plus by Fitch Ratings and Standard & Poor's, and Aa2 by Moody's Investors Service.
TBW supplies wholesale drinking water to 2.3 million people in Hillsborough, Pasco, and Pinellas counties as well as the cities of New Port Richey, St. Petersburg and Tampa. About $1.02 billion of debt is outstanding.